Freehold vs leasehold property in India, and conversion

The rule

The Transfer of Property Act, 1882 defines a lease as “a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity”, in consideration of a premium and/or rent (s. 105). The one who grants it is the lessor, the holder is the lessee, the up-front price is the premium and the periodic payment is the rent.

Three consequences for a buyer:

• The lease deed governs. The Act’s default rule lets a lessee transfer their interest (s. 108(j)), but only “in the absence of a contract to the contrary”; leases granted by authorities usually require their permission. In Delhi, the minutes of a meeting of MoHUA, DDA and the Land & Development Office (L&DO), quoted by the High Court, state that the lessee “can apply to DDA for transferring their properties”.
• The lease can end. A lease determines on the expiry of its term, by surrender, or by forfeiture if the lessee breaks an express condition providing for re-entry (s. 111). Misuse of the property or unpaid dues therefore matter more than with freehold.
• The lessee stays liable. A lessee who transfers does not “by reason only of such transfer” cease to be subject to the liabilities of the lease (s. 108(j)).

Leasehold or freehold: what changes

Conversion to freehold: Delhi as the example

Delhi is the case Payotte has read; other authorities run their own schemes and rates.

Who could convert. The DDA page describes a scheme to convert “residential flats as well as residential built up plots irrespective of the size” from leasehold to freehold on payment of conversion charges. The L&DO order of 24 June 2003 extended conversion to built-up industrial, commercial and mixed land use leases, stated that no conversion fee is charged for plots of up to 50 sq. m and certain small flats, and that conversion is not allowed where a property involves encroachment on Government or public land.

How it worked (DDA flats, 2014 brochure).

1. The scheme is optional and covers DDA flats (Janta, EHS, LIG, MIG, HIG, SFS) built before 1992 on leasehold.
2. The one-time charges are set by flat category and zone, with remissions for original allottees; the rates are stated to be provisional, the final rates being fixed by the Ministry.
3. A purchaser or GPA holder could apply up to 10 October 2011 on payment of a surcharge of 33⅓% on the conversion charges; a GPA or agreement to sell executed from 24 September 2001 onwards must be registered.
4. A mortgaged flat needs the lender’s no-objection certificate; a flat under title dispute cannot be converted; pending mutations must be completed first.
5. An application in order is decided within 45 days; the conveyance deed is then stamped and registered with the Sub-Registrar, with stamp duty and registration charges paid by the applicant.

Where it stands in 2026. According to the Delhi High Court’s order of 28 September 2026:

• the DDA’s Interactive Disposal of Land Information System (IDLI) portal has been non-functional since 2 January 2026, pending a policy decision on whether conversion charges should be calculated on circle rates;
• 1,373 applications filed between 2020 and 2026 were pending, with ₹155.06 crore of conversion charges collected, including 308 approved cases where conveyance deeds had not been executed;
• all pending applications are to be processed under the policy prevalent on the date of filing, within two months of the order;
• the policy for future applications is to be placed before the Court at the next hearing, listed on 11 December 2026.

If you are buying a leasehold DDA property, assume that conversion is not available to you until the DDA reopens applications, and check its site before signing.

Step by step: buying a leasehold property

1. Read the lease or sub-lease deed: term, permitted use, ground rent, transfer clause, re-entry clause.
2. Check the lessor’s record: mutations and transfer permissions in the seller’s name, and that no dues are pending. See mutation of property records.
3. Check whether it has been converted. A converted property has a registered conveyance deed from the authority; ask for it.
4. Avoid GPA chains. Since Suraj Lamp & Industries v. State of Haryana (2011), SA/GPA/Will transactions do not transfer title, for leasehold as well as freehold property: see power of attorney sales and the law.
5. Run the usual title checks: title search and encumbrance certificate.
6. Register the sale deed and pay stamp duty: stamp duty calculator, property registration process.

Which professional to consult

A property lawyer (advocate) enrolled with the State Bar Council reads the lease and the lessor’s file. See property lawyers. Lenders check leasehold terms before lending: see home loan lenders. This guide is general information, not legal advice.